Sleepless night

O sleep, O gentle sleep, nature's soft nurse, how have I frightened thee, that thou no more will weigh my eyelids down, and steep my senses in forgetfulness?

-- Shakespeare, Henry IV, Part 2, Act 3, Scene 1


O polish’d perturbation! golden care! That keep’st the ports of slumber open wide to many a watchful night!

-- Id, Part 2, Act 4, Scene 5


Unable to sleep, I went to my desk and did some research for a prospective law review article on taxation. It is now at the tedious stage where I keyword search the Internal Revenue Code and then make notes on the respective relevant sections.

This is by no means my first law review article. My last one is now under editorial review, and the target date for inking up the press is February or March 2007. At least two of my law review articles have been cited in published judicial opinions.

So now, having heard my son's alarm clock in the next room, I am looking out the window and realizing that it is 6:00 AM and the sun has risen (hiding behind the cloud cover, to be sure).

At this point it really doesn't pay me to get back to sleep. My schedule for today will not require me to be robust and alert, and maybe I can get in a nap this afternoon.

Tomorrow, however, is a different story. Tomorrow is my first day of class for the Fall semester, and I will need to be in top form. In teaching a class, there is a window of approximately 90 to 120 seconds during which the professor (or, for that matter, a grade school teacher) must (A) establish his/her authority; (B) inform the class of the overall lesson plan for the semester; and (C) make the students interested in learning the material. It isn't too difficult to do all of these things, but the semester will be a total washout if all three are not done.

Yesterday's Tax Court opinions are still in the "Today's Opinions" files instead of "Historic Opinions" files. The case of Flank v. Commissioner, Tax Court Summary Opinion 2006-134, will eventually be filed in the archive instead of the current, maybe in the next few hours.

After ruling on the various issues regarding a married couple's IRA distributions and the taxability thereof, the Tax Court then addressed the taxpayers' well-founded contention that the IRS " has rounded up or rounded down the amounts for the proposed adjustments to the return to prejudicially favor the IRS" in a manner contrary to the IRS's own regulations. The Court's decision sidestepped the issue, finding " even if petitioner is correct, the difference in each calculation is less than $1, and the impact on petitioners’ total tax is negligible."

On one hand, the Judge Dean appropriately applied the maxim "De minimis non curat lex" to this penny-ass matter. On the other hand, there is something wrong with the IRS getting away with contravening its own regulations to the detriment of the taxpayer.

It is noted that in Thommen v. Commissioner, T.C. Memo 1995-152, the Tax Court included $21interest in the taxpayer's gross income (though the taxpayer was using the so-called tax protester arguments and was sanctioned for doing so). And in Danner v. Commissioner, T.C. Memo 1992‑385, there was $36 unreported income as an item at issue.

Is the Tax Court too cozy with the IRS? Probably not! The Tax Court does tend to look at things objectively, and the fact that the IRS enjoys the presumption of correctness, while the taxpayer must prove each element of a claimed deduction or exclusion certainly skews the IRS's batting average in that tribunal. But the IRS, like any other administrative agency, needs to be kicked in the toochas once in a while or else it will get out of hand.

I think that Hizzoner passed up an opportunity to crack the whip against the IRS. The principle, and the damage to the public perceptions regarding the Tax Court's objectivity, are worth somewhat more than the Flanks' pocket change at issue here.

Okay, now to go get dressed. I have some appointments today.

Pension Protection Act of 2006

One of the non-pension provisions of the Pension Protection Act of 2006 is Section 1217 of the Act.

Effective for tax year 2007, " No deduction shall be allowed … for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution.’’

For over a decade, we have needed written acknowledgments for donations of $250 or more (which is why I frequently send out charity checks in the amount of $249), but now you need some sort of record for the small stuff. This means that unless you are in a very, very low income bracket, beginning 2007 you should NOT just indiscriminately empty your loose pocket change into the pushke or Salvation Army drum or collection plate or whatever receptacle would otherwise be consistent with your socioreligious biases and tendencies (my own preferences gravitate towards the former, but that is a function of my own socioreligious biases).

This means an added burden for the charitable giver, and also an added burden for every charitable recipient from the big league American Red DoubleCross or your local house of worship. Many donors/donees might not wish to be bothered.

Expect to see:

(1) More checks in pushkes and Salvation Army drums and church collection plates;

(2) More organized and structured giving along the lines of the Combined Federal Campaign, which has its own problems;

(3) A few astute marketing people in some banks who will be touting arrangements such as the one my own household has been using for many years, namely, two checking accounts; one for the ordinary household bills and expenses, and the other, funded with 10% taken off the top of our respective paychecks, exclusively for charitable contributions; and

(4) People who have checking account arrangements such as the one in (3) above will decide that they don't wish to be bothered with the recordkeeping requirements for the small stuff, and accordingly, will limit their charitable contributions to, perhaps, 10 or 15 selected charitable doneees, to the exclusion of others.


The Pension Protection Act will certainly help to reduce prevent the abuses now going on with overreporting of charitable contributions, but it also will serve as a disincentive for the smaller charitable organizations. It will likely do to the small houses of worship what Home Depot has done to the small hardware stores, and what Staples and Office Max have done to the small mom-and-pop stationery stores, and what Borders and Barnes & Noble have done to the small mom-and-pop book stores.

Taxation almost always has some side effect that is at odds with the noble intention of Congress.

Buying into Mel Gibson

A young man who frequents our congregation when he comes out to visit his parents was recently discussing his new employment with an investment banking firm. He acknowledged the validity of my observation that "investment banking" is nothing more than financing high-risk business ventures, and taking the appropriate measures to limit the risk factors (not to mention charging higher than usual interest rates).


This latest incident with Mel Gibson has caused a media mania, which I will now attempt to cut through and analyze the issues rationally. There are those who condemn Gibson, those who defend him as a troubled alcoholic who needs help, and some who take some sort of middle of the road attitude.


Having been raised in a household where the paterfamilias was a holocaust denier, Mel Gibson has serious problems acknowledging the severity of what the Nazis did and what the terrorists are doing. He also has a faith rooted in the Catholic Church as that organization existed before John XXIII and John Paul I and II were able to even begin to shake its image and connections with the Crusades and the Inquisition. His "Passion of Christ" film and his failure to adequately repudiate his father's holocaust denial did little for his goodwill among the Jewish community.

He has asked for help in dealing with his personal problems associated with ethanol abuse. I, for one, am willing to tentatively accept the notion that Mel Gibson is a suffering alcoholic who needs help. I, for one, would like to see him overcome the evil inclinations which no doubt torment him day in and day out, because he has such great potential to do good.

Given Mel Gibson's background and track record, the simple and naïve acceptance of his explanations, though appropriate for many others who have misstepped or misspoken, is not prudent when it comes to Gibson. Mel Gibson is a high-risk investment, and while I personally am willing to buy into the notion that he needs our understanding and empathy more than our condemnation, it would be irresponsible for me to take such risk a risk on behalf of the entire Jewish community, just as it would be inappropriate for me to invest the funds of an orphanage in high-risk business ventures or junk bonds.

I wish Mel Gibson the best of luck in dealing with his alcoholism, and hope that he can control his problem and go forward to excel in his good works.